SCBT Financial Corp. Reports Operating Results (10-Q)
Scbt Financial Corp. has a market cap of $475.77 million; its shares were traded at around $37.33 with and P/S ratio of 2.83. The dividend yield of Scbt Financial Corp. stocks is 1.82%. Scbt Financial Corp. had an annual average earning growth of 1.1% over the past 10 years.SCBT is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations: goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss cannot exceed the carrying value of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted. Management has determined that SCBT has one reporting unit. Our stock price has historically traded above its book value and tangible book value. However, during the year ended December 31, 2009, our stock price occasionally traded below book value, but always above tangible book value. During 2009, the lowest trading price for our stock was $16.53 per share, and the stock price closed at $27.69 and $37.04 on December 31, 2009 and March 31, 2010, respectively, above book value and tangible book value. In the event our stock were to trade below its book value at any time during the reporting period, we would perform an evaluation of the carrying value of goodwill as of the reporting date. Such a circumstance would be one factor in our evaluation that could result in an eventual goodwill impairment charge. We evaluated the carrying value of goodwill as of April 30, 2010, our annual test date, and determined that no impairment charge was necessary. Additionally, should our future earnings and cash flows decline and/or discount rates increase, an impairment charge to goodwill and other intangible assets may be required. Core deposit intangibles, included in other assets in the condensed consolidated balance sheets, consist of costs that resulted from the acquisition of deposits from other commercial banks or the estimated fair value of these assets acquired through business combinations. Core deposit intangibles represent the estimated value of long-term deposit relationships acquired in these transactions. These costs are amortized over the estimated useful lives of the deposit accounts acquired on a method that we believe reasonably approximates the anticipated benefit stream from the accounts. The estimated useful lives are periodically reviewed for reasonableness. Income Taxes and Deferred Tax Assets Income taxes are provided for the tax effects of the transactions reported in our condensed consolidated financial statements and consist of taxes currently due plus deferred taxes related to differences between the tax basis and accounting basis of certain assets and liabilities, including available-for-sale securities, allowance for loan losses, accumulated depreciation, net operating loss carryforwards, accretion income, deferred compensation, intangible assets, and pension plan and post-retirement benefits. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. In situations where it is more likely than not that a deferred tax asset is not realizable, a valuation allowance is recorded. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. We file a consolidated federal income tax return for our subsidiaries.
Results of Operations We reported consolidated net income available to common shareholders of $49.0 million, or diluted earnings per share (EPS) of $3.86, for the first quarter of 2010 as compared to consolidated net income of $3.7 million, or diluted EPS of $0.33, in the comparable period of 2009. The increase comparing the three months ended March 31, 2010 to the same quarter of 2009 was primarily the result of the gain on acquisition of CBT offset by an increase in the provision for loan losses, an increase in OTTI charges related to pooled trust preferred securities, the prepayment fee for the early pay-off of legacy SCBT Federal Home Loan Bank (FHLB) advances and CBT merger-related expense.
Compared to the first quarter of 2009, our loan portfolio has increased 14.0% to $2.6 billion driven by the addition of $438.8 million in acquired loans covered under FDIC loss sharing agreements. Excluding the acquisition of CBT, our loan portfolio declined 5.1% compared to the first quarter of 2009. The decline was a result of decreases in construction and land development loans, commercial and industrial loans, commercial non-owner occupied loans, consumer non real estate loans, and consumer owner occupied loans. For the three months ended March 31, 2010, we originated approximately $90.6 million of mortgage loans in the secondary market, down from $198.4 million of mortgage loans during the first quarter of 2009. We have experienced a slowing of the refinancing activity from the first quarter of 2009 partially due to tightening of loan underwriting standards within the secondary mortgage markets.
· Diluted EPS increased to $3.86 for the first quarter of 2010 as compared to $0.33 for the comparable period in 2009. Basic EPS increased to $3.89 for the first quarter of 2010 as compared to $0.33 for the comparable period in 2009. The increase in both diluted and basic EPS reflects recognizing a gain on the FDIC - assisted acquisition of CBT.
· Gain on acquisition of $98.1 million, after-tax of $62.5 million, resulting from the acquisition of CBT. As a result, we recognized $3.9 million in merger-related expense.
Total loans, net of deferred loan costs and fees, (excluding mortgage loans held for sale) increased by $321.4 million, or 14.0%, at March 31, 2010 as compared to the same period in 2009. The increase resulted from the addition of loans covered under FDIC loss share agreements in the CBT acquisition. Non-covered loans or legacy SCBT loans would have decreased by $117.4 million, or 5.1%, at March 31, 2010 as compared to the same period in 2009. The decrease was driven by reductions in construction and land development loans of $77.1 million, commercial and industrial loans of $37.3 million, commercial non-owner occupied loans of $31.0 million, consumer non real estate loans of $20.7 million and consumer owner occupied loans of $10.7 million. Offsetting these reductions was some loan growth in commercial owner occupied loans of $39.6 million and home equity loans of $18.4 million.
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